Bill > HR364

This bill modifies tax rules for U.S. territories (specifically Guam, American Samoa, the Northern Mariana Islands, Puerto Rico, and the Virgin Islands) by changing how residency and income sourcing are determined for tax purposes. The bill adjusts the definition of a "bona fide resident" by changing the substantial presence test, requiring individuals to be present in a territory for at least 122 days (instead of the previous standard) to qualify as a resident. It also revises source rules for income, clarifying how income is classified when it is connected to business activities in these territories or the United States. Specifically, the bill provides more nuanced guidelines for determining whether income is effectively connected to a trade or business in a territory, and excludes preparatory or auxiliary activities in the United States from being considered U.S.-sourced income. Additionally, the bill makes technical amendments to how sales of personal property are taxed. These changes are designed to promote economic recovery and provide more equitable tax treatment for individuals and businesses in U.S. territories, and will take effect for tax years beginning after December 31, 2024.

Budget and Finance

https://www.congress.gov/bill/119th-congress/house-bill/364/all-info